Going it alone

As the twice-yearly Value Investing Congress (V.I.C) concluded last week, various investing sites provided the observer with a “post-mortem” peak into its conclusions.

Besides the usual, deeply thoughtful, high quality presentations and analyses, I was mostly struck by two things above everything else.

One was the contrarian nature of the recommendations (shorting Green Mountain Coffee Roasters anyone?!) and the other was the level of individualism that is so prevalent among leading investors. By this I mean that no matter how deep the talent bench may be at some of the funds presenting at the V.I.C , the fact remains that both glory and pain are attributable almost exclusively to those at their helm.

Reading letters to investors from high performing funds reveals this feature in clear fashion. Very rarely are references made to the value of consensus decisions or group analysis. Whilst it is true that many great investors cut their teeth at some of the larger funds (think Tiger Management), in their formative years, it is also the case that ultimately a manager worth his salt will set up shop alone.

At a time when some leading investors appear to be faltering such as Bruce Berkowitz at Fairholme (down 27% so far this year) with his ill-timed bet on financials and John Paulson whose Advantage Plus fund is currently down some 32% year-to-date, it is important to ignore the crowd and pay heed to the wise words of Benjamin Graham:

“You’re neither right nor wrong because other people agree with you. You’re right because your facts are right and your reasoning is right—and that’s the only thing that makes you right. And if your facts and reasoning are right, you don’t have to worry about anybody else."

Personally, I take comfort in these words as I continue to invest new money in the markets whilst the cacophony of macroeconomic prognosticators grows ever louder and the global growth engine fails to take off.

My suggestion is to allow for 3-5 years to pass, and to look back at Mr. Paulson’s and Mr. Berkowitz ‘s annualized performance once again before judging too prematurely.

Investing is indeed a lonely game, but in my opinion it’s all the better for it!.